Till date RBI has not stipulated any minimum balance requirements that need to be maintained by a customer in his saving or current account.
Banks are prescribing these requirements based on the cost involved in maintaining accounts. If you do not maintain your minimum balance then bank will levy specific charges for it. In private banks these charges are higher compare to nationalized banks.
Minimum balance in a saving account is calculated either monthly (MAB) or quarterly (QAB). If your bank’s requirement is to maintain MAB then bank will take all day’s closing balance and divide it by the number of days in a month to get your average minimum balance that you are required to maintain in that month.
If its higher or equal to the minimum requirements then you are safe. If it is lower than the minimum requirement then as per bank’s policy, you will be charged penalty for not maintaining such balance with them.
Similarly QAB is calculated by taking all day’s closing balance and divided by number of days in a quarter.
Formula for MAB = Total of all day’s closing balance / Number of days in a month
Formula for QAB = Total of all day’s closing balance / Number of days in a quarter
Minimum balance is actually an average that you need to maintain with the bank. If your MAB is Rs. 5, 000 then you need to maintain an average balance of Rs. 5, 000 throughout the month. To do that, you can even deposit Rs. 1, 50,000 for a day and maintain zero amount for the rest of the period in that month as average balance will be Rs.5, 000 i.e. 1, 50,000/30.
Similarly QAB is also calculated. If your QAB is Rs. 5, 000 then you can deposit Rs. 4, 50,000 for a day and maintain zero amount for rest of the period in that quarter.
Compare to private banks, nationalised banks like SBI, PNB, BOB, UBI and BOI have lower minimum balance requirements. Even non maintenance of minimum balance, penalty is very low.
Recently most of these private banks moved from QAB requirements to MAB by which you have to maintain higher balance in these banks. However, RBI has made it very clear that banks cannot change its minimum balance requirements without intimating the account holder. In some cases, individuals while opening their account or after opening the account are not aware about such requirements. When they do not maintain such balance in their account, bank charge them penalty. If you have any concern on minimum balance then you can report it to RBI.